The report said: "It will take time to clarify the UK's new relationships with the European Union and the rest of the world as well as for the UK economy to adjust to these changes.

"The orderliness of the adjustment will influence the risk to financial stability."

Bank governor Mark Carney said clarity on the details of Brexit would help an orderly transition and that it is important British businesses know "as much as possible, as early as possible".

He also dubbed the UK the "investment banker for Europe", adding that it is in the EU's interests that Brexit damage to Britain's banking sector is minimal.

"These activities are crucial for firms in the European Union economy, and it's absolutely in the interest of the European Union that there is an orderly transition and that there's continual access to those services," he said.

His comments come as the financial services sector frets over whether it will continue to have access to the bank passporting system.

Banks and financial firms wanting to trade with a country in the European Economic Area (EEA) must apply for a passport, which allows them to sell their products to any country within the EEA.

The Bank added: "Changes to the trading relationship between the United Kingdom and the European Union may require firms to alter their operations and the services they provide.

"If any such adjustments take place in a short timeframe, there could be a greater risk of disruption to services provided to the European real economy, which could spill back to the UK economy through trade and financial linkages."

The report also said Donald Trump's US election victory earlier this month had "reinforced existing vulnerabilities", flagged the potential for weaker global trade and spoke about heavy debt in emerging market economies.

But despite the fall in sterling, a reduction in commercial property prices and indications of reduced investment into the UK, the Bank said economic activity and business sentiment have recovered from "low points" immediately after the referendum and are "materially stronger than had been expected in July".

The report comes alongside the Bank's annual health check for British banks, which saw Royal Bank of Scotland flunk its stress tests.

The lender, which is 73% owned by the taxpayer, emerged as the worst performer in the stress test and has drawn up a plan overnight to bolster its resilience in case of a financial crisis.

Prime Minister Theresa May's official spokeswoman said: "What matters the most for British businesses - whether that's the financial services sector, the automotive sector or others - is the outcome of these negotiations, and that is what we are focused on. How do we get the best deal for Britain as we leave the European Union?

"Our approach, therefore, is guided by that, which means where we can provide more certainty we will seek to do so - the Prime Minister has been clear on the timetable for triggering Article 50 - but also making sure that we've got the strongest negotiating hand. That is not going to mean going into every twist and turn and detail of these negotiations."

She added: "We are going to trigger Article 50 by the end of March next year. It's a two-year process, so we know when the end-point is coming."